Where's our Hoover Dam?
The Fed is an orphan who murdered his parents.
I agree with Joe Biden and Emily Litella that the greatest threat Americans face comes from White Eugenecists.
The Treasury Department could issue $700 billion in T-bills within weeks of a debt-ceiling deal, draining liquidity from markets
Well, not if the Fed just monetizes that $700 billion.
If not, you’d think this would make short rates spike, but that assumes some sort of supply-demand thing, which we know has been repealed. Now just imagine what T-Bills would yield if the Fed sold the $5.2 trillion they own, or even sold a mere $4.2 trillion (plus $2.6 trillion or so of MBS), getting the balance sheet down to the “less than $1 trillion” Ben Bernanke promised in 2010.
If you look at the Fed’s monthly Federal Funds Effective Rate data, from October to December 1980 rates rose 6%, after having been lowered by 6.63% in one month in May 1980.
The Fed Funds rate today isn’t even at the level of one or two month rate moves back then.
“I see rates right now at 6%, 5%, 6%? I mean, that’s free money still.”
It’s coming, any day now…
The Federal Reserve announced (proudly?) the other day that Total Household Debt Reaches $17.05 trillion in Q1 2023
Remember - every single thing the Federal Reserve has done post-2008 - until Powell very recently found religion - has been to try to get Americans into more debt, and it didn’t matter what kind of debt, at all.
Where’s our Hoover Dam?
"What debt does is it brings forward demand from the future." - Paul Hodges
"One of the most important lessons...is that an increase in debt is an increase in current spending in exchange for a decline in future spending, unless that debt generates an income stream to repay principal and interest..." - Lacy Hunt
"In any future crisis, sovereign debt will be a propagator of risk rather than a refuge." - Satyajit Das
The Federal Reserve Bank of Minneapolis released a new report, saying that inflation is going down in the Midwest but families are still feeling financial tension from the high prices over the past two years.
That should definitely comfort folks in the Midwest, although they might be forgiven if they’re a little bitter at the Minneapolis Fed President, Imhotep:
Kashkari, like most of the FOMC, is loaded, having been promoted from Goldman Sachs, to his plutocracy audition as Hank Paulson’s TARP water boy, to his payoff at Pimco, and then his inexplicable descent to the Minneapolis Fed Chief job, after losing a run for Governor of…California. Regardless, in 2021 the guy made about $450k at the Fed, just in salary, for idiotic and completely insensitive comments like the ones above.
Japan FY2022 Real Wages Fall Most in 8 Years Japan's inflation-adjusted real wages fell the most in eight years in the fiscal year 2022, government data showed on Tuesday, highlighting the pain of inflation eroding consumers' purchasing power.
The Bank of Japan has been trying to achieve this for years. They got exactly what they asked for.
Britons among most gloomy on inflation prospects, survey finds
As usual, the comments are often the best part of FT articles:
Imagine the relief average Brits will feel seeing this headline:
Britain’s Inflation Rate May Fall at Sharpest Pace in 30 Years
The Consumer Prices Index is expected to tumble to 8.2% last month from 10.1% in March, according to a Bloomberg survey of economists.
Typical British people react:
8.2% CPI is projected! What do you folks think? Isn’t that great?!
We’ll find out Wednesday.
Speaking of Britain, India may be removing the equivalent of $20 bills, and Larry Summers may want to ban $100’s, but Argentina is taking a different route:
Argentina has put a new 2,000-peso bill into circulation as the country endures one of the world’s highest inflation rates that has decimated the value of the local currency. The new bank note is worth double the previous highest bill in circulation, but is still worth only $8.21 at the official exchange rate and $4.08 at black-market rates.
Meanwhile…
Ghana central bank holds policy rate at 29.5% as inflation slows Ghana's consumer inflation slowed for the fourth consecutive month in April, to 41.2% year on year, after reaching a more than two-decade high of 54.1% in December.
On average, Independent Mortgage Brokers reported a net loss of $1,972 on each loan originated from January to March, a 35% improvement from the reported loss of $2,812 per loan in the fourth quarter of 2022, according to the Mortgage Bankers Association.
A Housing Bust Comes for Thousands of Small-Time Investors
Before Gajavelli found his real-estate career, the 61-year-old immigrant from India was just another information-technology worker, putting in 60-hour weeks for a middling job in Dallas. Last year, Gajavelli’s company owned more than $500 million worth of Sunbelt apartment buildings with more than 7,000 units, and was one of Houston’s biggest landlords.
Over the past four years, Gajavelli built his real-estate empire using funds from dozens of small investors who wanted a chance to earn a landlord’s riches without any of the work. He pitched double-your-money returns in ebullient, can-do talks at investor conferences and on YouTube videos.
…In April, Gajavelli’s company lost more than 3,000 apartments at four rental complexes taken in foreclosure, one of the biggest commercial real estate blowups since the financial crisis. Investors lost millions. Gajavelli didn’t respond to requests for comment.
Lyon County had 74 sales of existing single-family homes, a decrease of 23.7 percent from the previous month and a decrease of 33.3 percent from last year. The median sales price for an existing single-family residence was $380,000, an increase of 1.6 percent from the previous month and a decrease of 33.3 percent from last year.
I saw a comment on the above:
I have been to Lyon County, NV. That’s Fernley, Yerington, etc. The prices are so absurd that it is laughable. It’s a desert wasteland of sagebrush as far as the eye can see, and more land than you could ever possibly build houses on. You used to be able buy a house for $50,000. There are no words to describe house ridiculous a median price of $380,000 is in that area. I am staggered.
This is “drive until you qualify” on steroids. It’s shocking. Yerington is a place where it is extremely difficult to sell a house even in good times. In bad times, there are no buyers unless the house is prices so low that it finally finds a new owner. This bubble makes the 2006 peak look sane by comparison. I really cannot express how ridiculously overvalued these places are. A 75% drop could still leave houses overpriced in some areas, based upon wages and current interest rates.
I looked up what’s for sale in Lyon county, Nevada. I see that the median household income there is around $65k. (Not picking on Lyon County, I just was interested after reading the comments.)
First one I looked at, a 3br, 2ba:
That 2007-2016 history is what we called “chasing the market down.” I saw it in my own area back then. I wonder how prevalent it will be in this time.
Back in March I mentioned this:
As an aside, last night I was with some people for the first time, I guessed they’d be called Yuppies, 40’s. Anyway, I didn’t pry, because I’d just met them, but several of them talked about their “Airbnbs”, plural, problem with squatters, and the apparently multiple issues when changing your Wifi password at Airbnbs you manage remotely in other states. Very The Big Short vibe.
For what it’s worth, the other day I was with the same group, and I ask, “Have you noticed a difference between your AirBnb revenues now and, say, a year or two ago?” After a pause a guys says, “Yes, but we still are making enough to make the payment.” He mentioned that they might consider selling one house (they apparently have multiple) “as a turnkey AirBnb,” but added that that would really tick off the neighbors, who hate their current AirBnb (everyone there immediately spoke up disapprovingly of those neighbors, and said things like, “It’s your property” and “You can’t pick your neighbors.) Zero concern for the community, just 100% profit motive, which is to be expected today, but I found it a bit chilling. (Note that none of these people would own any AirBnb’s today if the Fed hadn’t spawned an orgy of “reach for yield” with over a decade of ridiculous monetary policies.)
Then I ask, why not sell it to someone who intends to live there, instead of as a “turnkey Airbnb”? Would you get more money as an AirBnb? The guy said, “The market has really softened” (this is in another state). I said, “Really?” and everyone in the room (also apparently with some AirBnb properties) suddenly agreed vigorously, “Oh yeah.”
The AirBnB yuppies are a sad reflection of what seems to be the value system currently in vogue - the quest for ‘easy money’ and to hell with everyone else. I get the primal drive - no doubt sufficient wealth makes life easier and brings a sense of security - but what is sufficient these days? Maybe if our system were less punishing for ‘losers’ people could afford to be less ‘greedy’ (I mean ‘losers’ in reference to the ordinary person who just wants a home and to be able to provide for family and retirement). https://youtu.be/92cwKCU8Z5c
Buying a home in NV is no different than the gambling of paychecks in Vegas. THEY'RE RUNNING OUT OF WATER!! It reminds me of the Sam Kinison bit about the people starving in Africa. "MOVE!!!!"